Starting with January 1, 2024, there will be changes regarding the taxation of pension income. The normative act that will regulate these changes is Law no. 282/2023, for the amendment and completion of some normative acts in the field of service pensions and Law no. 227/2015 regarding the Fiscal Code, published in the Official Gazette, Part I no. 950 from October 20, 2023.

The normative act contains amendments to the Fiscal Code regarding the calculation of tax on pension income and the payment term. So:

(1) Any payer of pension income has the obligation to calculate the tax monthly, according to the provisions of this article, on the date of payment of the pension, to withhold it and to pay it to the state budget by the 25th inclusive of the month following the month for which the pension is paid. The withheld tax is final tax.

(2) The monthly tax is determined by each pension income payer, as follows:

a) for the monthly income from pensions determined as a result of the application of the contributory principle, regardless of its level, from which the monthly non-taxable income ceiling of 2,000 lei is deducted, a tax rate of 10% is applied;

b) for the monthly income from pensions that has both a contributory and a non-contributory component, from which the non-taxable monthly income ceiling of 2,000 lei is deducted, for the contributory part the provisions of letter a), respectively a tax rate of 10%, and for the non-contributory part the following tax rates are applied progressively:

(i) 10%, for the part lower than the level of the average net salary or equal to it;

(ii) 15%, for the part between the level of the average net salary and the level of the average gross salary used to base the state social insurance budget or equal to it;

(iii) 20%, for the part that exceeds the level of the average gross salary used to base the state social insurance budget;

c) for the monthly income from pensions that only has a non-contributory component, from which the non-taxable monthly income ceiling of 2,000 lei is deducted, the following tax rates are progressively applied:

(i) 10%, for the part lower than the level of the average net salary or equal to it;

(ii) 15%, for the part between the level of the average net salary and the level of the average gross salary used to base the state social insurance budget or equal to it;

(iii) 20%, for the part that exceeds the level of the average gross salary used to base the state social insurance budget.

(3) The determination of the average net salary provided for in this article is determined by deducting from the gross average salary used to base the state social insurance budget the mandatory social contributions provided for in art. 2 para. (2) lit. a) and b) and income tax.

(4) In the case of a pension that is not paid monthly, the tax to be withheld is determined by dividing the pension paid by each of the months to which the pension relates.

(5) Outstanding pension rights are broken down by the months to which they refer, in order to calculate the tax due, its withholding and payment, in accordance with the legal regulations in force on the date of payment.

(6) Income from survivor’s pensions will be individualized according to their number, and taxation will be done in relation to the rights due to each descendant, according to the provisions of para. (2).

(7) In the case of income from pensions and/or differences in income from pensions established for previous periods, according to the law, the tax is calculated on the monthly taxable income, by applying the provisions of para. (2), is withheld on the date of payment, in accordance with the legal regulations in force on the date of payment, and is paid by the 25th of the month following the one in which they were paid. Differences in pension income, received from the same payer and established for previous periods, are taxed separately from the current month’s pension rights.

(8) In the case of income from pensions and/or differences in income from pensions, as well as the amounts representing their updating with the inflation index, established on the basis of final and irrevocable court decisions/final and enforceable court decisions, the tax is calculated separately against the tax related to the rights of the current month, by applying the provisions of para. (2), the withheld tax being the final tax. The tax is withheld on the date of payment, in accordance with the legal regulations in force on the date of payment of the respective incomes. The tax withheld in this way is paid up to and including the 25th of the month following the month in which the income was paid.

(9) Taxpayers can decide on the destination of an amount representing up to 3.5% of the income tax due for the support of non-profit entities that are established and operate under the conditions of the law and religious units, as well as for the granting of private scholarships, according to the law, in accordance with the regulations of art. 123^1 of the Fiscal Code.